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Investors and Not Criminals dominate Bitcoin Transactions, Says Federal Agent

Lilita Infante, a special agent of the United States Drug Enforcement Administration (DEA) has declared that Speculative investors dominate Bitcoin transactions as against criminal activities like money laundering, tax evasion, and drug trafficking.

Legitimate Transactions Dominate Criminal Cryptocurrency Activities

According to Infante, the ratio between legitimate and illegitimate uses of Bitcoin and cryptocurrencies has flipped in the past five years. Speaking to Bloomberg, Infante, a member of the DEA’s special 10-person Cyber Investigative Task Force said that illicit activities used to dominate the crypto space. According to Infante, in 2013, almost 90 percent of crypto transactions was for illegal purposes.

While the decrease isn’t an indication of criminals moving away from crypto, Infante declared that its use no longer overshadows that of retail investors. According to Infante:

The volume has grown tremendously, the amount of transactions and the dollar value has grown tremendously over the years in criminal activity, but the ratio has decreased. The majority of transactions are used for price speculation.

Cryptocurrency is the Native Currency of the Dark Web

Cryptocurrency remains the de facto currency of choice for transactions in the dark web. BTC first caught the public eye during the Silk Road investigation which shed light on the digital currency’s use in illegal activities.

According to Infante, criminal organizations are using cryptos more often to launder money due to the speed of the transactions as well as the absence of paper trails. Criminals tend to find such conditions favorable for keeping their dealings under the radar.

Criminals Can Keep on Using Bitcoin

However, Infante isn’t the least bit worried about the trend, saying:

The blockchain actually gives us a lot of tools to be able to identify people. I actually want them to keep using them.

Despite the anonymity of cryptocurrency transactions, it is still possible to track the movement of funds. Bitcoin, for example, uses an immutable public ledger. Thus, it is easy for the DEA or any other department of justice agency such as the FBI or ATF to trace funds.

While there are privacy-focused cryptos like Monero and Verge, they aren’t as liquid as Bitcoin, making them unsuitable for the needs of criminal organizations. Infante also revealed that even if criminals elect to use these privacy-centric coins, government agencies still possess the capability to track the funds.

What do you think about the revelations made by Infante? Keep the conversation going in the comment section below.

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Russians Indicted for US Election Hacks Used Bitcoin to Fund Operations

A group of Russian military intelligence officers indicted Friday as part of an ongoing investigation into Russian interference in the 2016 U.S. presidential election allegedly used bitcoin to fund their operations.

In the just-released indictment, prosecutors assert that the 12 named intelligence officers hacked computer networks and email accounts owned and used by the U.S. Democratic Party, including the presidential campaign of Democratic candidate Hillary Clinton.

The details were included under a charge of conspiracy to launder money. According to the indictment, the defendants “conspired to launder the equivalent of $95,000 through a web of transactions structured to capitalize on the perceived anonymity of cryptocurrencies such as bitcoin.”

“In an effort to pay for their efforts around the world … the defendants paid for it with cryptocurrency,” deputy U.S. Attorney General Rod Rosenstein said during a press briefing.

While the defendants allegedly used other currencies, including the U.S. dollar, “they principally used bitcoin when purchasing servers, registering domains, and otherwise making payments in furtherance of hacking activity.”

Payments are said to have been made to companies in the U.S., with some of those funds being traced to a bitcoin mining operation.

The indictment explains:

“In addition to mining bitcoin, the Conspirators acquired bitcoin through a variety of means designed to obscure the origin of the funds. This included purchasing bitcoin through exchanges, moving funds through other digital currencies, and using pre-paid cards. They also enlisted the assistance of one or more third-party exchanges who facilitated layered transactions through digital currency exchange platforms providing heightened anonymity.”

The defendants allegedly used multiple “dedicated email accounts” to both track bitcoin transaction information and facilitate payments, the release added. Further, the indicted officials transferred bitcoin using the same computers that they used in hacking various email accounts

The indictment is the latest to come out of the ongoing – and politically explosive –  investigation into Russian election meddling and the possible involvement of members of the presidential campaign of U.S. President Donald Trump.

Robert Mueller, a former Federal Bureau of Investigation director, was appointed in May 2017 to lead the special counsel investigation, which has drawn the ire of Trump, who has vehemently denied any collusion on election meddling.

Rod Rosenstein image via DOJ 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Mike Novogratz: DOJ’s Bitcoin Investigation is a ‘Good Thing’

One of the most important hedge fund managers and billionaire investor, Michael Novogratz, said that the investigation that is being carried out by the U.S. Department of Justice (DOJ) is a ‘good thing’ for the cryptocurrency market.

Novogratz Supports DOJ’s Bitcoin Manipulation Probe

It is important to understand that the U.S. Department of Justice decided to open an investigation that will analyse whether crypto traders have been manipulating the price of Bitcoin or not.

Something that could look like a bearish information for some enthusiasts, for some experts it is a good thing. This is what Mike Novogratz, Cameron Winklevoss, and Thomas Lee believe.

During an interview with Bloomberg, Mr. Novogratz, founder of the crypto bank Galaxy Digital, explained:

“Weeding out the bad actors is a good thing, not a bad thing for the health of the market. Plenty of exchanges have these inflated volume numbers to create some sense of excitement around coins.”

During the last year, several virtual currencies have been marked as manipulated after being pumped & and dumped in different periods of time. There are hundreds of pump & dump groups that modify the normal market trend of some low-volume cryptocurrencies.

As the virtual currency market is highly unregulated, these situations may continue to happen in the future in various exchanges if regulations are not implemented.

Cameron Winklevoss and Thomas Lee Agree With Novogratz

There are other figures in the cryptocurrency world that have also supported Mike Novogratz’s comments about DOJ’s decision to investigate virtual currencies. Cameron Winklevoss, co-founder of the cryptocurrency exchange Gemini, said that these regulations are welcomed by the market if they help deter bad actors.

Most of the cryptocurrency-related companies are searching for regulations that would bring legitimacy to the market. A field without regulation and with an important number of scams may not be able to prosper and grow. Investors will not have the necessary confidence to place their money in the game. And this is certainly not what cryptocurrency believers want.

In a similar way, Thomas Lee, co-founder of Fundstrat Global Advisors, wrote in an email to Bloomberg that these regulations are welcome news because they mean that there is ‘adult supervision coming/here.’

Tom Lee has predicted that Bitcoin will reach $25,000 dollars by the end of the year, even when the most important currency lost 25% of its price since the first week of May. Additionally, he explained that after the Consensus conference the price of Bitcoin should increase – something that did not happen until now.

At the moment of writing this article, Bitcoin (BTC) is being traded over $7,500 dollars and has registered an increase in the last 24 hours of 0.67%, according to CoinMarketCap. Other virtual currencies like Ether (ETH), Ripple (XRP), and Litecoin (LTC), are operating positively as well.

The virtual currency market needs regulations that will allow it to properly grow. It is important to have a framework that would let innovation to flourish but protecting investors from scammers and illicit activities. Institutional investors are slowly entering the market, and as soon as there will be more friendly regulations, the results will be even better.

The post Mike Novogratz: DOJ’s Bitcoin Investigation is a ‘Good Thing’ appeared first on Ethereum World News.

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US Regulators Say They Want to Avoid 'Hindering' Blockchain Innovation

U.S. regulators are still looking into cryptocurrencies and initial coin offerings, but don’t aim to suppress the industry, according to comments made during a panel at CoinDesk’s Consensus 2018 conference in New York.

Commodity Futures Trading Commission (CFTC) enforcement director James McDonald, Securities and Exchange Commission (SEC) Enforcement Division Cyber Unit chief Robert Cohen and associate deputy attorney general Sujit Raman participated in a panel discussion on enforcement activities in the space Tuesday. They were joined by Kiran Raj, chief strategy officer at crypto exchange Bittrex, with the panel moderated by attorney Steve Bunnell.

The government representatives, who disclaimed that they only spoke for themselves and not their respective agencies, notably all agreed that they did not want to hinder innovation or interfere unduly with blockchain or the tokens built on the nascent technology.

That said, they all also stated that they had to act against those seeking to defraud or outright steal from participants in the space.

Cohen and McDonald both said their agencies had “open-door policies” for those trying to launch token sales, with Cohen explaining:

 “The SEC has been open about meeting with people from the industry, to come in and meet with the staff, to talk about the ideas you have, the new developments, and have a dialogue about the new technology. The commission encourages ways to raise capital, we don’t regulate the technology – we regulate the financial industry and the markets.”

On actually regulating the space, McDonald noted:

“Our mission is to foster financially sound markets, and we understand as a regulator that requires a certain amount of [flexibility] in our approach. We’re doing it in a way that doesn’t hinder innovation and doesn’t interfere with other regulatory priorities.”

Raman similarly cited a need to protect Americans as the focus for any actions taken by the Department of Justice, saying:

“The number one priority for the Department of Justice is to keep people safe. One concern we have for the larger virtual currency space is large sums of money are flowing through the market without touching financial institutions … From a national security perspective or an anti-money laundering perspective, that’s something … we have to investigate. As with anything else, it’s a balance but it’s certainly one of our priorities, to know what’s going on.”

When asked about his concerns, Bittrex’s Raj pointed to a lack of regulatory clarity surrounding token sales:

“One of the big pieces of feedback I get … is we need more certainty. One of the main things we get is we hear about fraud … we agree, we don’t want them in the industry. The problem is how do we take guidance and apply it to what you’re doing when it’s so far away from what the fraud people are doing?”

McDonald agreed, saying:

“LabCFTC is providing their expertise to make sure we end up in the best place possible. We’re careful not to be putting ourselves out there in the same way that the policy divisions would be but the policy divisions are having conversations with market participants.”

However, Cohen said the SEC has released guidance on tokens, saying:

“The main issue is whether the token or whatever asset you have is a security, and the commission has put out guidance on that. If a firm or person is making a good-faith effort to comply with the law, and one step to that is if they’re talking to regulators, [we’ll work with them].”

For those who do seek to defraud others, Cohen said:

“It’s clear when people are not making good-faith efforts to comply, and that’s when we step in.”

Read the full rundown on Twitter.

Panel image by Nikhilesh De for CoinDesk (Kiran Raj, @CFTC’s James McDonald, @SEC_News’ Robert Cohen, @TheJusticeDept’s Sujit Raman and Steve Bunnell)

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.